Average Life Insurance Cost

It must also be noted that unlike other insurance policies, factors such as the residential area of the individual are not considered valuable while calculating the average life insurance rate for a person. It is mostly the health status, age, occupation, and the type of policy a person chooses that affect the premiums he/she shall pay. Below is a detailed discussion of how the age of a person and the type of term policy will impact the premiums to be paid.

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How does Age affect the Average Life Insurance Cost?

A simple analysis of the 20-year term insurance plan of $250,000 reveals the following facts about the changing premiums for people between 25 and 65 years of age:

• Young people between 20’s and 40’s pay relatively low premiums than those aged above 50.

• People, who smoke, pay up to 200% more premiums than the non-smokers.

• A 25-year-old smoker pays 2 times more than the normal rates, while a smoker above 60 years pays 3 times the average life insurance rate.

Hence, the above analysis not only sheds light on the impact of age on the average life insurance cost but also highlights the increase in the premiums for smokers in comparison to non-smokers.

Changes in the Premiums based on the Term Policy Chosen:

As said earlier, insurance premiums are also affected by the type of term policy one chooses. Term policies are categorized into 10-year, 20-year, and 30-year term schemes. And in general, life insurance quotes increase with the increasing years in the term plans. In simple words, the average life insurance rate for a 10-year term policy is about $568 and this substantially increases up to $1,528 for a 30-year policy.

However, it must be noted that the term life insurance scheme has cheaper premiums in comparison to the whole or universal life insurance policies. Hence, this scheme turns out to be the most widely chosen among the residents of the United States. Below is a detailed description of the changes in premiums for different term insurance plans.

The 10-year Term Plan:

As mentioned in the previous section, the 10-year term life insurance policy is the cheapest of all the other schemes. The average life insurance cost one has to pay for a 10-year policy will usually range around $568 and is highly suitable for people who have a limited budget. It is also beneficial for those people who do not feel the necessity of having coverage after 10 years of their life.

The 20-year Term Plan:

This scheme proves to be the friendliest of all the options. Though the 20-year plan offers higher rates in comparison to the 10-year scheme, its long duration benefits are what most people get attracted by. The 20-year term plan is suitable for families having young kids, as they tend to have more expenses than other people. Such families tend to fall into more debts like education loans and mortgages; hence, they often choose for the 20-year term plan that provides a decent coverage at not so costly rates.

The 30-year Term Plan:

The 30-year plan is the costliest and the most flexible option of all the three schemes. Though the premiums for this plan are high, the biggest advantage is that the rates will remain constant throughout the span of 30 years. In other words, the insured will have to pay the same insurance rate, set while finalizing the deal for the whole 30 years irrespective of his/her health condition. For instance, if a healthy person aged 25 had signed a 30-year life insurance scheme and turns out to have some health issues above 40 years, even then the average life insurance rate will remain the same.

The above discussion summarizes all the important points that affect the average life insurance cost in the United States.